DIVISION 1 - GENERAL REQUIREMENTS SECTION APPLICATIONS FOR PAYMENT
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1 DIVISION 1 - GENERAL REQUIREMENTS SECTION APPLICATIONS FOR PAYMENT I. GENERAL This section specifies administrative and procedural requirements governing Contractor Applications For Payment. II. PRODUCTS Not applicable. III. EXECUTION A. GENERAL. While this Section shall govern, the Contractor shall comply with supplemental administrative procedures which may be issued by the University at the Pre-Construction Conference. B. SCHEDULE OF VALUES. 1. Each Contractor shall establish a detailed breakdown of the costs indicating a schedule of quantities and values for the items of work included in his Contract. This detailed breakdown of the costs shall be his Schedule of Values. The Schedule of Values shall be coordinated with the Construction Schedule, subcontractors and suppliers, the Application for Payment form, and other required administrative schedules and forms. 2. The Schedule of Values shall use the format provided at the end of this Section, or another format acceptable to the University. The listing of Technical Specifications in the Project Manual Table of Contents may be used as a guide to establish the Items for the Schedule of Values. a. The Contract Price should be broken down into components represented by Items (Columns: Item Number and Item Description) in sufficient detail to facilitate evaluation of progress for progress reports and. Principal subcontract amounts should be broken down into several Items. Each Item should be complete including its total cost and proportionate share of general and administrative overhead and profit. All dollar amounts should be rounded to the nearest whole dollar. The total of all the Items (Column: Extended Prices) should equal the Contract price. b. The Contractor may include his initial cost of bonds as a separate Item. c. The Contractor may include itemized mobilization costs as a separate Item. Mobilization costs should include those costs required for establishment of the field construction operations, but not including costs for the continued operation of the field construction operations for the duration of the project. For Contracts up to $6,000,000, the Contractor may include mobilization costs of up to three-quarters of a percent (0.75%) of the contract price at award. For Contracts exceeding $6,000,000, the Contractor may propose mobilization costs in excess of $45,000, but the final amount shall be determined by negotiation with the University before submission of the Schedule of Values for approval. Contract duration should also be a consideration in negotiation of mobilization costs. Mobilization costs, if included on the Schedule of Values, may include, as appropriate: (1) Setup of field offices/trailers and storage buildings/facilities (2) Setup/hookup of power, telephone, and other utilities and services for the offices/trailers and the site (3) Setup/hookup of temporary power, water, and other utilities and services required for construction Rev. 12/8/ Page 1 of 5
2 (4) Installation of fencing, construction fencing, gates, and other protective and demarking facilities (5) Installation of access routes, parking, and storage facilities (6) Installation of signs, postings, and traffic control (7) Site survey, to include establishing construction baselines and benchmarks (8) Acquisition of safety and health general protective equipment for the workforce and the general public, to include protective facilities (9) Building permits and other permits (10) Other appropriate costs d. The Contractor may include general conditions costs, commonly called field office overhead costs, as a separate Item. General conditions costs should represent the cost of continued operation of the field construction site and operations for the duration of the project. For Contracts up to $6,000,000, the Contractor may include general conditions costs of up to four percent (4%) of the contract price at award. For Contracts exceeding $6,000,000, the Contract may propose general conditions costs in excess of $240,000, but the final amount shall be determined by negotiation with the University before submission of the Schedule of Values for approval. Contract duration should also be a consideration in negotiation of general conditions costs. General conditions costs, if included on the Schedule of Values, may include, as appropriate: (1) Salaries of onsite management personnel and other personnel not assigned to any specific Item(s) of work and not paid from general and administrative overhead (2) Cost of vehicles and equipment not assigned to any specific Item(s) of work (3) Rental of field offices/trailers and storage buildings/facilities (4) Cost of power, telephone, and other utilities and services for the offices/ trailers and the site (5) Cost of temporary power, water, and other utilities and services required for construction (6) Periodic and ongoing maintenance of fencing, construction fencing, gates, and other protective and demarking facilities (7) Periodic and ongoing maintenance of access routes, parking, and storage facilities (8) Periodic and ongoing maintenance of signs, postings, and traffic control (9) Periodic and ongoing safety and health activities for the workforce and the general public, to include protective facilities (9) Periodic and ongoing maintenance of erosion control, dust control, and environmental protection (10) Other appropriate costs e. The Contractor may include itemized demobilization costs as a separate Item. Demobilization costs may include those costs required for de-establishment, discontinuation, and removal of the field construction operations. Demobilization costs, if included on the Schedule of Values, may include, as appropriate, costs similar to those categories identified in paragraph III.B.2.c.above. 3. The general and administrative overhead identified in paragraph III.B.a. and the general conditions costs identified in paragraph III.B.d. should represent distinct and different costs. The contractor may choose to include his general conditions costs as a part of the overhead included in paragraph III.B.a, but in that case he will have no general conditions costs in his Schedule of Values. If used, this alternate accounting methodology shall be used throughout the duration of the contract, and shall be carried over into change order pricing. 4. The Contractor shall submit his proposed Schedule of Values to the University prior to or at the Pre-Construction Conference. Once approved by the University, the Schedule of Values shall be used as basis for payment with. Rev. 12/8/ Page 2 of 5
3 C. APPLICATIONS FOR PAYMENT. 1. The Initial Application for Payment, the Application for Payment at Substantial Completion, and the Final Application for Payment involve additional requirements, as outlined in paragraphs III.D., III.E, and III.F. below. 2. Each Application for Payment shall be consistent with previous applications and payments as certified and paid by the University. Entries and data on the Application for Payment shall match data on the Schedule of Values and the Construction Schedule. 3. The schedule of periodic payments and the specific dates and time frames relative to will be provided by the University at the Pre-Construction Conference. Payments will be made not more frequently than monthly. The following shall be followed: a. A pencil copy of the contractor s Application for Payment must be submitted to the University Project Manager on the 23 rd day of each month. The pencil copy will be reviewed by both the Fiscal Technician and the University Project Manager for accuracy. b. The corrected/approved pencil copy of the Application for Payment will then be returned to the contractor and shall be the basis for the preparation and submission of the actual Application for Payment, which will be submitted directly to the University s design professional. Three originals are required. 4. The Contractor shall use AIA Documents G702 and G703, Application and Certificate for Payment, or another form acceptable to or prescribed by the University. 5. shall be submitted in the manner and format, to the person or address, and in the number of copies specified by the University at the Pre-Construction Conference. 6. Each Application for Payment shall be signed by a person authorized to sign official Contract documents on behalf of the Contractor. 7. shall incorporate fully-executed Change Orders and Construction Change Directives issued prior to the last day of the period covered by the Application for Payment. 8. Prevailing Wage Act Certifications. For each project in which prevailing wages are required, the contractor shall comply with all the requirements of the Prevailing wage Act, including the submission of weekly wage reports to the System. No application for payment will be considered complete without the attachment of the certification of the wages paid by the contractor, for the time period of the application for payment. The only authorized and acceptable form is the Labor & Industry Weekly Payroll Certification for Public Works Projects (LLC-25 REV 10-03) form. that include payroll certifications using any other form or format will be rejected and returned to the contractor for correction and resubmission. that include payroll certifications that contain employee social security numbers and home addresses will also be rejected. These rules also apply to any subcontractors employed by the prime contractors. One original form is required at time of submission. 9. If the University erroneously overpaid on an item on a previous Application for Payment, the University reserves the right to correct the overpayment on subsequent. Rev. 12/8/ Page 3 of 5
4 10. An Application for Payment will be processed for payment if it is a proper invoice. An Application for Payment is a proper invoice if it contains: itemization and substantiation of the amount requested, and certification. Certification shall be a signed statement by the Contractor acknowledging that the work covered by the application for payment has been completed in accordance with the contract, that all amounts have been paid to subcontractors and suppliers for work for which previous payments were made by the University, and that the current requested payment is now due. All other requirements, such as deficiencies that arise from statutorilyrequired submissions, deficiencies that arise from System, University, or contractually-required submissions, and deficiencies that arise from other contractual requirements, will not stop an application for payment from being processed, but instead, will result in withholding of money from the payment. 11. If the University determines that the Application for Payment is not a proper invoice, the University will notify the Contractor as soon as possible, but no later than seven (7) days from receipt of the Application for Payment, that it is not a proper invoice and as to the reasons why. In this case the Contractor shall be required to submit a new Application for Payment. D. INITIAL APPLICATION FOR PAYMENT. 1. The University may reject the Initial Application for Payment if the following items have not been submitted or completed by the Contractor prior to or in conjunction with the Initial Application for Payment. a. Approved Schedule of Values b. List of Subcontractors, Principal Suppliers, and Fabricators 2. The University may reject an Application for Payment if the Preliminary Project Schedule or the Initial Project Schedule, in accordance with Section 01315, Project Schedule, are due by the date of that Application for Payment but have not been submitted. E. APPLICATION FOR PAYMENT AT 50% PROJECT COMPLETION. 1. In accordance with Rider B, Paragraph , the amount of retainage for the project may be reduced from 10% to 5% once the project has reached the 50% completion point. To effect this reduction in retainage the requesting contractor must submit the following to the University: a. An Application for Payment (AIA Document G702 and G703) indicating the reduction in retainage, with a cover letter requesting a reduction in retainage. b. Consent of Surety to Reduction in or Partial Release of Retainage (AIA Document G707A). F. APPLICATION FOR PAYMENT AT AND AFTER SUBSTANTIAL COMPLETION. 1. Requirements for Substantial Completion are found in Specification Section 01700, Project Closeout. After receipt of the Certificate of Substantial Completion, the Contractor should submit an Application for Payment at Substantial Completion for reduction in retainage. This Application shall reflect any Certificates of Partial Substantial Completion issued previously for designated portions of the work and any previous reductions in retainage that may have been processed. 2. The Application for Payment at Substantial Completion should show 100 percent completion for the portion(s) of the work identified as substantially complete. For that work that is not 100 percent complete, the Contractor shall provide a proposed schedule for completion of any incomplete work and a proposed cost estimate to complete each item of work. The basis of this work is the punch list attached to the Certificate of Substantial Completion. The University shall have the final decision as to the schedule and cost for these items of work. Rev. 12/8/ Page 4 of 5
5 G. FINAL APPLICATION FOR PAYMENT 1. Requirements for Final Completion are found in Specification Section 01700, Project Closeout. After receipt of the Certificate of Final Completion, the Contractor should submit a Final Application for Payment. 2. The following administrative actions and submittals must precede or coincide with an Application for Payment at Substantial Completion. a. The Contractor shall submit a Consent of Surety to Final Payment, using AIA Form G707 or another form acceptable to or prescribed by the University. b. The Contractor shall submit AIA Forms G706 and G706A, or other suitable proof of payment of taxes, fees, and similar obligations. H. PAYMENT FOR STORED MATERIALS. 1. The University will consider making payment for materials or equipment not yet incorporated in the work, but delivered and suitably stored at the site or at some other location agreed upon. 2. Payment will be made under the appropriate Items on the Schedule of Values as part of a periodic progress payment. 3. In order for the Contractor to receive payment for materials or equipment that have been delivered to the Contractor, paid for, and stored at the Contractor s place of business or some other storage site, then the University must determine that the materials or equipment are critical to the project. The materials or equipment must be documented on the System's Stored Materials & Bill of Sale Form or another form acceptable to or prescribed by the University. Payment shall be conditioned upon the Contractor s submission of the Forms, or other forms or invoices which adequately establish the University s title to such material or equipment that remain under the custody and control of the Contractor regardless of the exclusions in the insurance policies. 4. Payment will be made only for the invoiced price of the materials. Overhead and profit will not be paid on stored materials. Rev. 12/8/ Page 5 of 5
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